Southwest Airlines' battle with activist investor heats up: Are free bags on the chopping block?

Published On Sep 4, 2024, 9:26 AM

Southwest Airlines is facing pressure from activist investor Elliott Investment Management, which now holds a 10% stake in the airline. Elliott is pushing for a comprehensive review of Southwest's business practices, citing missed commercial opportunities, particularly in relation to fees. The firm suggests that changing policies, such as the allowance for two free checked bags, could improve the airline's financial performance. However, Southwest has stated that there are currently no plans to alter this policy but is monitoring customer preferences.

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The ongoing battle with Elliott might prompt Southwest to make significant changes to its business model, which could impact its market position. Investors should be cautious as pressure from activist investors can lead to volatility in stock prices, especially if substantial policy shifts are implemented.

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